Sales Contracts and Disclosures

What contract should an FSBO use?

Almost every seller and buyer in Florida use the same “AS IS” Residential Contract For Sale And Purchase agreement, which is approved by the Florida bar and Florida realtors. This is the sales contract most real estate agents use and it is available for everyone, not just licensed real estate brokers and associates. There are also standard additional forms that can be used which deal with most scenarios that can arise, such as financing and environmental issues.

Either party can prepare this document. It is simple to ‘fill in the blanks’ so independent sellers and buyers without an agent should feel comfortable doing this. If you want extra help, then consult with a real estate attorney or closing attorney. It is much cheaper to have them look over this than an agent who is taking a % of your equity.

What sellers disclosures are required?

The standard Florida sales contract includes numerous sellers disclosures, which are required by Florida and Federal law. The three disclosures that are widely discussed are:

• Lead-Based Paint Disclosure – A federally required disclosure for individuals selling property built before 1978.

• Sellers Property Disclosure– Sellers are required to disclose facts materially affecting the value of the property which are not readily observable and are not known to the buyer. These would include knowledge of termites, Chinese drywall, a leaky roof, A/C defects, plumbing and electrical issues, boundary disputes, repairs that have been made etc.
  • As home-sellers are not required to disclose obvious matters, anything in plain site such as broken floor tiles would not need to be disclosed.
  • Homeowners are not required to go searching for house defects, they just have to report material issues they are aware of.
  • Homeowners are not liable for matters affecting value that they are unaware of, even if they should have been aware of them.
• Property Tax Disclosure – Sellers are required to provide a statement notifying potential buyers that property taxes may increase and that they can contact an appraiser for more information.

In addition there are other mandatory Seller’s disclosures about Radon Gas, Outstanding Permits, Mold, Flood Zone, Energy, details of any Home-Owners/Condo Association, and whether the seller is a foreign person.

It is important to make the necessary disclosures. However, there are no statutory requirements to notify buyers about whether there was a homicide, suicide or death in the home, or whether a person with HIV/Aids lived there.

What if I don’t make sellers disclosures?

Failure to make the required disclosures can give the buyer the right to sue for damages and/or rescind the contract. Litigation can be expensive, so best to be honest and truthfully complete the disclosures.

And don’t think using an agent to sell your home would protect you from having to make the disclosures. They must be made by all home-sellers, irrespective of whether they have agent representation. Further, agents also have a duty to disclose hidden defects affecting home value if they are aware of them. So whether you are an independent seller or use an agent, the disclosures discussed in this article must be made.